I was previously an acquisitions analyst who enjoyed the works of creating JV,Waterfall, Real estate models, using ARGUS. I was wondering how much more technical real estate can get and which firms are the most technical/prestigious. What do these prestigious firms do?
I understand that at the end of the day deal flow is the name of the game, but I'm still curious.
Usually I think REPE/REITs are the prestigious firms.
Thoughts?
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How much more technical can real estate get?
Well, real estate can be very, very technical depending on the nature of the deal. If you're investing capital in a foreign market you may have to take into consideration offshore items such as entity structuring, tax treaties, capitalize rules and more. Then you have to take into consider onshore items, which vary from market to market. The real estate returns of such a deal may be attractive yet upon further inspection the net investor returns may be less attractive because of the considerations detailed above.
However, in the grand scheme of things real estate is very, very simple. If you're actively modeling as you're suggesting, the above is more about taking it on a case by case situation, thinking through what materially changes the risks and modeling it accordingly.
More 'prestigious' firms tend to be more technical because their deals are larger and more complex. Therefore all aspects of the investment must be vetted aggressively which usually boils down to advanced modeling and sensitivities.
Waterfalls = preftige
From a high level, I'm wondering whether GIS is going to get any traction in the AM and acquisitions side going forward and being less of a development thing, seeing how more counties are investing in easily accessible online GIS databases, via ArcGIS, QGIS, etc. That would be more technical for the future.
Avoid family offices like the plague. "Why can't you open an ARGUS file with Excel? You incompetent POS!"
brookfield. They unplug your mouse on your first day and make you model every deal from scratch (no templates). I find that unnecessary and hate that kind of culture, but they are known to be technically savvy.
Is this even possible? Yes one can definitely work with Excel without a mouse, but how about navigating through websites like CoStar etc. You cannot do it without a mouse.
Alt tab to browser, Ctrl+T for new tab, type in website, tab down to login, etc. etc.
Blackstone are insane at modelling. I was in awe when I saw the first one!
You saw one of their models?
yep, I previously worked for them.
I've been working in LIHTC Asset Management for about three months and it's the most sophisticated real estate sector I've been exposed to. I come from a multifamily debt portfolio management background and I'm not a pro at modeling, but our workbooks are very complex. You have to understand how to create yield from benefits like tax credits, depreciation, and operating losses, so it involves a lot more tax accounting and document review than "typical" real estate.
^ This all day. LIHTC models and concepts are so much more complicated than vanilla real estate.
I'm exploring some opportunities and a position similar to this sparked my interest. What do you like about it, and what are some things you wish you had known earlier that would help on the job?
Hey Bubba. I like this job because I do different stuff every day. I could be reviewing a partnership agreement, adjusting a proforma, writing a consent memo, preparing for an exit, reviewing an audit or tax return or construction inspection... The possibilities are endless. I'm someone who hates routine so this is a good fit for me. I wish I knew more about tax law and accounting as there is a pretty steep learning curve with that stuff.
Thanks for your answer. Could you go into a little more detail behind the tax accounting landscape/law that makes the modelling a little more complicated as you mentioned?
There are dozens of idiosyncratic rules and regulations pertaining to LIHTC partnership agreements. Aside from all the usual real estate analysis and development stuff, you need to have a lawyerly comprehension of legal documents. Additionally, all those provisions outlined in the partnership agreement will need to be modeled. For example, an exit analysis involving concepts like capital accounts, minimum gain, and a cash flow waterfall. It would be impossible to explain to you in generic terms what makes something complicated since you have no frame of reference for what I'm talking about. I'd recommend doing your own due diligence, google LIHTC, watch YouTube videos, read a partnership agreement. Then if you have a specific question, feel free to ask.
Any LIHTC syndication firm.
Low prestige firms rely on archaic techniques using hermit crabs painted to represent different asset types (Self Storage, Senior Housing, Data Storage). The crustaceans will scuttle across a small arena with a map as the flooring; where ever the crab comes to rest is where the firm will typically start a new development. Some boutique firms, I have heard, use a mix of excel modeling and Ouija board.
hilarious +1
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